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Portugal’s Novo Banco, the “good” bank rescued from the collapse of Banco Espírito Santo, posted a net loss of €788.3m in 2016 after making provisions against impairments totalling €1.3bn, the lender said in a stock-market statement on Wednesday.

The results compare with a net loss of €929.5m and provisions of €1bn in 2015, the bank’s first full year of operations. Net operating income more than doubled to €386.6m, up from €125m in 2015. Net assets fell to €52.3bn, down from €57.5bn previously.

Portugal agreed two weeks ago to sell 75 per cent of Novo Banco to Lone Star, a US private equity fund, in return for a €1bn capital injection. However, BlackRock and other international investors are seeking an injunction to block the sale as part of a legal battle to recover losses on bonds transferred to a “bad” bank in 2015.

António Ramalho, Novo Banco’s chief executive, said he did not expect the bid to secure an injunction to stop the planned sale to Lone Star from being completed in the coming months. He was also confident that a planned €500m exchange of senior Novo Banco bonds for new bonds, a move designed to strengthen the bank’s capital, would prove successful.

“Investors will have to weigh up the benefits of exchanging bonds in a transition bank for bonds in a bank with a long-term future,” he said. The bond exchange is voluntary, but also a pre-condition of the sale to Lone Star. Last week Moody’s downgraded Novo Banco’s long-term senior debt because of the planned exchange, which it described as “distressed”.

Novo Banco cut operating costs by 21.7 per cent to €590.9m in 2016, leading to a drop in the bank’s cost-to-income ratio from 85.8 per cent in 2015 to 60.4 per cent last year. Its estimated common tier one equity ratio, a measure of capital strength, fell from 13.5 per cent at the end of 2015 to 12 per cent last year, “in line with the main Portuguese banks”, the bank said.

The value of Novo Banco’s so-called side bank, from where it is selling off non-core assets, fell to €8.7bn, down from €10.8bn at the end of 2015.